Professional Documents
Culture Documents
What Is The Cryptocurrency Is It A Threat To Our National Security
What Is The Cryptocurrency Is It A Threat To Our National Security
Citation: Zohuri B., Hang T. Nguyen., Moghaddam M., What is the Cryptocurrency? Is it a Threat to Our National Security,
Domestically and Globally?. I J T C Physcics, 2022; 3(1): 1-14.
Abstract
Since the rise of Bitcoin in 2009 and recent interest in digital currency is on an ascending trend, the question is
how far will it penetrate in financial system other industries? How stable is this currency? With recent comments
from CEO of Tesla Elon Mask, we saw a crash of 14% in Bitcoin stock overnight trades of any other existing crypto
currency stock in open market came to a halt. Thus, one should be concern about stability of digital currency,
providing no centralized banking standing behind any of these digital crypto currencies like we see in traditional
banking business where currencies are being backed up and insured by Federal governments like FDIC in United
States. In this short review, we have brought a high level of information from the web at a very holistic level, yet
in a layman language for those readers that want to have a quick understanding of Crypto Currencies or Digital
Currencies that seem a hot topic of today’s market.
Keywords: FDIC (Federal Deposit Insurance Corporation), Cryptocurrency, Digital Currency, Dark Market, Cyber Attack
and Cyber Ransom, Cyber Criminal, Cyber Space and Cyber Security, Credit Card and Mortgage Market Industry, Energy and
Renewable Energy.
Introduction
The announcement that Tesla CEO, Elon Musk made on his and data mining, Big Data (BD) requires tremendous
May 13 tweet that his company no longer accepts Bitcoin or computing power and therefore a considerable amount of
any other cryptocurrency for purchase of his cars, the crypto electricity. Warehouses of Bitcoin and other crypto-currencies
market was hit by a big shot. His logic of refusing to accept mining are no different. Bitcoin mining rigs run 24 hours a day,
Bitcoin for purchase of his electric vehicle or e-Vehicle was consuming more power than the whole country of Argentina,
that it increases the use of coal and other fossil fuels, such as as illustrated and charted in Figure-2 as well.
oil to generate and produce power that is used for the High
Power Computing (HPC) behind crypto-currency mining. (i.e., “It is really by design that Bitcoin consumes that much
see Section below in respect to the subject of Crypton-Mining), electricity,” Mr. Rauchs told BBC’s Tech Tent podcast. “This is
as illustrated in Figure-1. Thus, he was showing his opposing not something that will change in the future unless the Bitcoin
opinion to the electricity generated from the said resources to price is going to significantly go down”.
decrease induction of carbon monoxide and dioxide for a better
healthy environment and reduce the carbon footprint globally. The online tool has ranked Bitcoin’s electricity consumption
above Argentina (121 TWh), the Netherlands (108.8 TWh) and
The falling price of Bitcoin happened overnight at the rate the United Arab Emirates (113.20 TWh) - and it is gradually
of 14% was a shocking wave, and still in effect, considering creeping up in Norway (122.20 TWh).
that Bitcoin, Ethereum, Dogecoin and other popular cryptos
reached record highs this year, raising concerns about the The energy it uses could power all kettles used in the UK for
amount of energy needed to mine the coins. 27 years, it said. However, it also suggests that the amount
of electricity consumed every year by always-on but inactive
As we know from our knowledge of past in data warehousing home devices in the US alone could power the entire Bitcoin
I J T C Physcics, 2022 www.unisciencepub.com Volume 3 | Issue 1 | 1 of 14
network for a year. Moreover, a Bitcoin is defined by a sequence of digitally
signed transactions that was started with Bitcoin’s creation
To better follow this short review and subject of discussion, around 2009, as a block reward, and the best chain (i.e., Black
we need to have a better understanding of Bitcoin and crypto- square) consist of the longest series of transaction records
currency and the concept of technology behind it. To start with, from the genesis block (i.e., Green square) to the current
we introduce the basic concept of digital currency and what is block or records. (i.e., purple square) exist outside of the
the idea behind it. best chain as illustrated in Figure-3.
Moreover, Bitcoin and its encryption driven by Coin Mining The original Silk Road was shut down in October 2013 and
to insure some degree of anonymity to its users is becoming there have been two more versions in use since then. In the
heavenly financial path for criminals and black market known year following the initial shutdown of Silk Road (as illustrated
as “DarkSide”, and is a rat race between them and FBI, as we in Figure-12, where payment system, produced as evidence in
saw in past few months when cyber attackers also known as the trial of its owner), the number of prominent dark markets
cyber criminals with their ransomware attacked our pipelines increased from four to twelve, while the amount of drug listings
and the meat industry. The threat by hackers caused price hike increased from 18,000 to 32,000 (ALI, 2015).
of gasoline at pumps and meat in grocery stores nationwide.
Anonymity
We have learned by now that most of cryptocurrency within
a transaction between sender and receiver (i.e., Person A to
Person B) or per se within a wallet is not tied to people, but
rather to one or more specific keys (or “addresses”) (Justina ,
2018).
Decentralization of traditional currency driven by influence Shawn Allen the founder and principal owner of “Community
and impact of any digital currency at the given rate into Trust, A flexibility alternative”, thinks and predicts that digital
market and becoming more popular to extend that some small and crypto currency that is driving decentralization through its
Caribbean countries central government are trending to make blockchain technology as a digital ledger, will represent the
cryptocurrency as their official day-to-day currency of trade, future of the mortgage industry and for one, he is determined
would have an adverse and devasting effects on their mortgages that Matrix Mortgage will be at the forefront of it (Fergal
and credit card industry, if their local banking system using this McAlinden, 2021).
traditional revenue avenue to compensate for their income, in
particular in case of credit union type banks. He even further went to say that by telling “the Mortgage
Broker News that blockchain and decentralized finance were
As we know, most credit unions existence is infrastructure set to “take the whole industry by storm” as Matrix announced
based upon their members to barrow from them either in form last week that it would accept cryptocurrency for payments of
of primary or secondary mortgage market for these unions to goods and services”.
make money on the collecting interests and be able to survive
as a many bank. Home loan and saving also survive on the Further quote from him stated that, “If you’re not prepared for
same principle, although 2007 and 2008 banking crash forced what’s to come [in terms of] automation and Smart Contracts,
a lot of these small banks fold up and Federal Reserve under then you’re really going to get sideswiped with the amount
direction from secretary of treasury during President George of technology that’s coming down the pipeline,” he said. “I’m
Bush the second, managed a path for these banks to be bought more confident now than ever with the market and the crypto
by bigger and financially powerful commercial banks take space. I figured: it’s time to really put my foot forward and say,
them over. ‘We’re here to stay, let’s get this thing going”.
As we can see here, and in the next section of this article, there Allen even stated that, “CMHC [the Canadian Mortgage and
is a direct correlation between mortgage and issuing credit Housing Corporation] is kind of spearheading that whole
cards and digital currency with a very adverse and devasting revolution as well, with blockchain as the public ledger,” he
effect on any bank existence in long run, if this currency said. “It’s very transparent and secure, and CMHC’s blockchain
becomes more and more popular and demand goes up for day- initiatives [are] right in line with what we’re seeing in regard to
to-day trading among industrial market and population. In next utilizing cryptocurrency, Smart Contracts and the blockchain
section we are extending our point of view with more granular to transact and improve the mortgage process.
details.
“We’re not trying to make a blockchain mortgage; what we’re
Cryptocurrency and its Economic impact on Mortgage and trying to do is originate a qualified mortgage using blockchain.
Credit Cards Market We’re using the technology to try to improve the process and
As cryptocurrencies and digital payments starting to take shorten the sales cycle” (Fergal McAlinden, 2021).
more share in daily financial transactions, one could foresee
the potential economic impact that they hold. Distinguishing Folks like him believe that embracing digital or cryptocurrency
itself from traditional payment method, cryptocurrency as means of payment is an inevitable mortgage market of near
pivots around the idea of decentralization which eliminates future, given the intermediaries such as blockchain technology
altogether the existence of intermediates such as banks. Most initiative resulting decentralization of its feature and that is
financial activities currently involve cash and credit cards where the threat is going to glow and force small financial
that are controlled and governed by cooperate banks, federal institute that particularly are making money in secondary
banks, and credit institutions. If the future sees cryptocurrency mortgage market.
become the new norm, an entire industry to be removed and
economic reformation is expected. Thus, this article takes a He even says, “It’s just like accepting Visa or Mastercard
look at the butterfly effect cryptocurrency might hold once it through a regular merchant services account,” he said. “But
is utilized on a big scale. Is this change a financial revolution this way, it is received in crypto and settled into Canadian
or a serious security threat? That is one essential question that dollars in the bank account (Fergal McAlinden, 2021).
needed to be addressed.
One of the main factors as a variable force behind adaption of
Now given that the trend of demand for cryptocurrency is currency such as Bitcoin or any other digital currency is the
upward, the question we need to ask is, “are cryptocurrencies benefits offered by blockchain as a digital ledger.
the future of the mortgage industry?” “Is it a threat to revenue
generating income driven by interest collection on credit card The claim is that all the records in blockchain such as account
issuing banks and companies or even interest collecting from payable or account receiver are publicly available, even if the
One area of concern as we said in, association of cryptocurrency Now the question is what association blockchain has with
with climate is coming from demand for ample energy to power renewable energy?
the crypto mining process as well as generating tremendous
amount of heat by its energy web that is integrating so much Blockchain, which is new digital ledger that is virtue of
computer power as shown in Figure-13. So we need to working replacing the traditional Account Payable and Receivable
on making cryptocurrency possibly greener. process, is also impacting everything from online transactions
to e-government on renewable energy as well.
Augmentation Artificial Intelligence System along with About 83% of people say they are slightly familiar with or not
Machine Learning and Deep Learning (DL) sub-system at all familiar with cryptocurrency. Bitcoin and other alternative
assisting consumer driven smart grid that are using blockchain currencies depend on a technology called blockchain. Although
as a tool to make energy grids more accessible and sustainable people often assume blockchain and cryptocurrency are the
by promoting data-sharing in real time. The idea behind same, the reality is that blockchain has additional applications
creating energy grids linked to blockchain is fairly simple: by beyond money.
giving consumers total control over where they source their
energy as well as the information behind the production itself Cryptocurrency presents major strides in economic growth
it drives competition and promotes sustainable energy(James and freedom to individuals such as in developing nations as
Ellsmoor, 2019). well as those under economic sanctions. The crypto market
is known to be easier to access than traditional banks due to
Consumers using a smart-grid that relies on blockchain will be less regulations and allows citizens to bypass governments and
able to compare their energy providers and buy directly from regulations to mine for cryptocurrency rewards to utilize, trade,
them as part of national energy grid, at least in USA. and convert for common goods to survive.[118] In countries
with high inflation where fiat currency is no longer available to
As illustrated in Figure-14 by cryptocurrency going green and easily utilize to survive, many have turned to cryptocurrency
that is the force behind crypto climate. working through online job boards to bypass strict regulations
and achieve economic freedom.